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Robert Kleinknecht

Organizational Antecedents of Managerial Short-Termism


In recent decades, concerns have arisen that corporate leaders focus too much on quarterly earnings while neglecting value creation for the long term. In search of the antecedents of such behavior, scholars have concentrated on macro-level factors. In recent years, also individual-level aspects are increasingly analyzed. Yet, relatively limited attention has been paid to the role of organizational-level antecedents.

This PhD thesis contributes to filling this gap in the literature. Specifically, Chapter 3 argues that the combination of institutional ownership and managerial entrenchment pushes managers’ temporal orientation to the short term. A content analysis of over 18,000 earnings conference calls from more than 1,000 publicly-listed U.S. companies over the period 2007–2014 supports this idea.

Chapter 4 argues that organizational structures that increase managers’ cognitive distance from operations shorten managers’ temporal orientation, which is supported by the results from a survey conducted among more than 3,200 managers of non-listed companies from the Netherlands in 2014.

Finally, Chapter 5 analyzes the effects of employee participation in corporate decision-making on firm value among a sample of over 700 firms from 17 European countries in the period 2006–2008. The results suggest that employee participation increase the salience of long-term corporate objectives over short-term goals.

Jointly, the empirical analyses within this thesis indicate that in addition to macro-level and individual factors, managers’ temporal orientation is also shaped by organizational antecedents. Besides having implications for management practice and future research, this opens up possibilities for policymakers who are concerned about managerial short-termism.